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WHAT HAPPENED TO THE 2.6 TRILLION SOCIAL SECURITY TRUST FUND???

SunShine 2011/07/15 15:05:21

Another betrayal of the people of this country.. what is new? When will we truly
get representative government that does the will of the people?

Here’s how President Barack Obama answered CBS’s Scott Pelley’s question about whether he could guarantee that Social Security checks would go out on August 3, the day after the government is supposed to reach its debt limit: “I cannot guarantee that those checks [he included veterans and the disabled, in addition to Social Security] go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it.”


And Treasury Secretary Timothy Geithner echoed the president on CBS’s Face the Nation Sunday implying that if a budget deal isn’t reached by August 2, seniors might not get their Social Security checks.


Well, either Obama and Geithner are lying to us now, or they and all defenders of the Social Security status quo have been lying to us for decades. It must be one or the other.


Here’s why: Social Security has a trust fund, and that trust fund is supposed to have $2.6 trillion in it, according to the Social Security trustees. If there are real assets in the trust fund, then Social Security can mail the checks, regardless of what Congress does about the debt limit.


President Obama’s budget director, Jack Lew, explained all this last February in USA Today:


“Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries. … Even though Social Security began collecting less in taxes than it paid in benefits in 2010, the trust fund will continue to accrue interest and grow until 2025, and will have adequate resources to pay full benefits for the next 26 years.”


Notice that Lew said nothing about raising the debt ceiling, which was already looming, and it shouldn’t matter anyway because Social Security is “entirely self-financing” and off budget. What could be clearer?


Unconvinced, syndicated columnist Charles Krauthammer wrote a subsequent column questioning Lew’s assertions. “This [Lew’s] claim is a breathtaking fraud. The pretense is that a flush trust fund will pay retirees for the next 26 years. Lovely, except for one thing: The Social Security trust fund is a fiction. … In other words, the Social Security trust fund contains—nothing.”


Social Security status-quo defenders have assured us for the past 25 years that Social Security is fully funded—for the next 25 years, or 2036. So if there are real assets in the Social Security Trust Fund—$2.6 trillion allegedly—then how could failure to reach a debt-ceiling agreement possibly threaten seniors’ Social Security checks?


The answer is that the federal government has borrowed all of that trust fund money and spent it, exactly as Krauthammer asserted. And the only way the trust fund can get some cash to pay Social Security benefits is if the federal government draws it from general revenues or borrows the money—which, of course, it can’t do because of the debt ceiling.


Thus, the answer to my initial question is that the president is telling the truth now in the sense that he is conceding there’s no money in the trust fund to pay benefits; but he and other Social Security status-quo defenders have been deceiving the public for decades.


And here’s the real irony: Anytime someone has proposed personal Social Security retirement accounts as a way to ensure that people have real assets in their own account without bankrupting the government or future generations, defenders of the status quo would pounce, calling such a reform, in Al Gore’s words, a “risky scheme.” They have vociferously claimed that those trust fund assets are real and that only by having the government manage and control the accounts would seniors be guaranteed to get their retirement checks.


Well, we have the status quo and seniors may not get their checks. Had we shifted to a system of pre-funded, personal Social Security retirement accounts years ago, this wouldn’t even be an issue—because retirees would have their own money in their own accounts.


Yes, the accounts likely would have declined when the stock market went down, though not if the reform were structured like three Texas counties did 30 years ago (see here). But in case you haven’t noticed, Social Security revenues also declined during the economic downturn—because fewer people were working—so that the government is paying out more in benefits than it is taking in, and hence needing additional federal revenues, a fact admitted by Lew.


If the budget crisis has done nothing else, it has exposed the decades-long lie about the solvency of the Social Security trust fund. The trust fund may be backed by the “full faith and credit of the federal government,” as defenders constantly remind us, but if it had real assets the president wouldn’t be talking about seniors missing their checks.

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  • imtoast 2011/07/22 00:27:47
    imtoast
    +1
    Social Security was initially put into a protected trust. Lyndon Johnson broke that trust and put Social Security funds into the General Fund. It is the reason why most of congress is against reform. If it were to be made public, there would be a lot of politicians on trial for theft.
  • Winnel 2011/07/18 17:37:26
  • 4dc 2011/07/17 16:48:39
    4dc
    +1
    it is of course safely tucked away in the Federal Reserve awaiting disbursal by the Social Security Fairy

    safely tucked federal reserve disbursal social security fairy

    UH-OH!
  • SunShine 4dc 2011/07/18 18:49:26
    SunShine
    that's funny
  • Richard 2011/07/17 16:45:05
    Richard
    +1
    They spent it at McDonalds and Burger King
  • nick n. 2011/07/17 04:24:16
    nick n.
    +1
    A tax is a tax and anyone who believed the Democratic party on Social Security was pretty stupid. They put Bernie Maddoff in prison because he was cut from the same cloth as the average Democrat.
  • Hsmagst 2011/07/17 04:09:45
  • nick n. 2011/07/17 03:57:48
    nick n.
    +1
    Algore told us about a lockbox that does not exist. The Democrats have been lying about social security for a long time and Bojangles just confirmed it when he threatened to stop their payments if the GOP didn't negotiate. Well the seniors should not worry about having to eat Alpo when there is plenty of Democrats to barbeque Texas style. Once you get past the concept, ribs is ribs.
  • Lerro DeHazel 2011/07/16 22:16:32
    Lerro DeHazel
    George W. Bush must have spent it and now there's not any left . . .
  • Spider20 2011/07/16 19:48:43
    Spider20
    +2
    Maybe there's a Bernie Madoff in the govt............ :-)
  • 4dc Spider20 2011/07/17 16:28:17
    4dc
    +2
    435 of them...they call themselves "congress"
  • Spider20 4dc 2011/07/17 17:31:38
    Spider20
    +1
    You caught my hint......
  • PrettieReptar 2011/07/16 17:12:47 (edited)
    PrettieReptar
    Multifaceted problem. I'll name a few. Executive raiding of surpluses by Clinton and Bush. The 2009 Economic stimulus signed by Nobama. Inflation. Unemployment.
  • gibyob 2011/07/16 15:00:12
    gibyob
    +1
    The way the Government brought down a large portion of Oragized Crime was to create the RICO act and go after them for taking union retirement funds to finanace their growth into legit businesses like casinos and law firms. The government does the same thing but is exempt? I don't think so. It is time we put them in their place and arrest all of them and try them under the RICO.
  • Cheetah 2011/07/16 13:09:29
    Cheetah
    +1
    It' filled with IOU's from a Government that stole the money
  • Diane Spraggs Yates 2011/07/16 12:44:37
    Diane Spraggs Yates
    +1
    Well we will hear it is Bush"s fault when they get caught in the cookie jar !!!!! Liar=in=Chief !!!! A cookie jar full of IOU's !!!! They do not call the Party of spending for nothing !!!!! Abortions killed off future payees into the fund Did not obey the do not steal commandment and here we are in this mess !!!!
  • elptrek P.H.A.E.T.'s wizard 2011/07/16 12:17:36
    elptrek P.H.A.E.T.'s wizard
    +1
    He forgot to mention about the government raids of social security over the years that they have never paid back. (as far as I know)
  • Jon 2011/07/16 12:06:44 (edited)
    Jon
    +1
    For year The United State congress has been dipping in our Social Security Trust Fund and putting in IOU. The IOU have expired and it time for congress to pay back these funds I believe congress is under the assumption that they don't have to pay it back. Well I have new for them just like the bale out money that went to GM and AIG paid back to US Treasury . Now it congress turn to pay up and show where this money went. I hope the American people are tried of being rip off out of the there tax money by every Tom, Dick and Hairy out there from small business to large corporations over charging for services and products. Look at the mess were in it was bound to catch up with US and now it has.
  • nick n. Jon 2011/07/17 04:06:12 (edited)
    nick n.
    +1
    You will have to pull the real bastards from their Florida condos since they have since long retired. Hopefully there is a database somewhere and someone can verify their location.
  • Jon nick n. 2011/07/18 03:43:27 (edited)
    Jon
    ya right nick and you go and do that and let me know.
  • nick n. Jon 2011/07/18 04:29:46
    nick n.
    +1
    That's just a project for farther down the pike....but I expect it will get done if my name isn't ...Robespie...............
  • dandieselonian 2011/07/16 11:56:49
    dandieselonian
    +1
    the bush administration raided the fund
  • Cheetah dandies... 2011/07/16 13:11:03
    Cheetah
    +2
    They have been raiding it since it's inception long before there was either Bush, Dodo
  • my2cents dandies... 2011/07/17 03:42:07 (edited)
    my2cents
    They certainly took their share. But they're not the only ones who did.
  • nick n. dandies... 2011/07/17 04:12:45 (edited)
    nick n.
    Actually the fund never existed. Look who passed the laws relating to it. Remember it was a tax so it was never the property of the individual. It belonged to the government all along but you were too stupid to see it.
  • Jon dandies... 2011/07/18 03:44:33
    Jon
    +1
    It goes back to Reagan and ended with Bush.
  • GINGERBREAD 2011/07/16 11:17:06
    GINGERBREAD
    +1
    GOOD QUESTION. But I have the answer, if you care to really and trully find out. It all stated whith the LBJ administration. During that time, LBJ was worried about the inflation he was creating with the Viet Nam War and all his "WAR ON POVERTY" crap that he pushed through congress. When those bastards in congress and LBJ realised that all of that was going to cause inflation(printing all the money, you know) They passed a law to put everything in the general fund (Social Security, H'way tax, et al). Until then, those were in a "LOCKED BOX". That meant that the government could not touch it other than what it was for. So, all you DEMOCRATS, your democratic administrations has always stolen from all of us, and not one of them has been put on trial or put in jail. Why is that? Dunno, maybe they were democrats?
  • my2cents GINGERB... 2011/07/17 03:41:30
    my2cents
    +1
    Dunno, maybe because the Republican President's DID IT TOO? You people are unbelievably thick if you're simple enough to think only Dems did this. It's been going on since FDR. Republican President's spent it just as quickly.
  • GINGERB... my2cents 2011/07/17 14:19:27
    GINGERBREAD
    +1
    Sorry, but it was the democrats that caused all of this. Now, granted, when the republicans took over, they could have turned it around, but they just kicked the can down the road. They didn't want their democrat buddies go to jail. It's still the BUDDY SYSTEM in Washington. No matter who takes over, each one covers the others ass.
  • my2cents GINGERB... 2011/07/18 20:16:36
    my2cents
    Sorry, but Republican presidents spent the SS funds just as freely. Not every issue is a partisan one.
  • GINGERB... my2cents 2011/07/18 20:55:49
    GINGERBREAD
    +1
    Just as I said. When LBJ put all of that in to the general fund, the republicans didn't anything about it when they got the power. But it all started out with LBJ.
  • my2cents GINGERB... 2011/07/19 02:46:11 (edited)
    my2cents
    Actually, what you said about LBJ putting SS monies into the general fund is party accurate. He did do this for budgetary reasons, but it did not "open the flood gates" and permit SS monies to be used for other non-SS spending. That had been going on since social securities inception, the overages were invested in treasury bills--in effect, loaned to the government to cover other spending--and was permitted in FDR's original proposal. But until 1968, the SS fund had always been kept separate from the general government budget, in 1968 SS and all other government trust funds were added in to the national budget.

    "The investment rules governing payroll tax income were also established in 1935, and are essentially the same ones in use today. Specifically, the 1935 Act stated: "It shall be the duty of the Secretary of the Treasury to invest such portion of the amounts credited to the Account as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States." (See Title II, Section 201of the 1935 law)

    Since the assets in the Social Security trust funds consists of Treasury securities, this means that the taxes collec...









    Actually, what you said about LBJ putting SS monies into the general fund is party accurate. He did do this for budgetary reasons, but it did not "open the flood gates" and permit SS monies to be used for other non-SS spending. That had been going on since social securities inception, the overages were invested in treasury bills--in effect, loaned to the government to cover other spending--and was permitted in FDR's original proposal. But until 1968, the SS fund had always been kept separate from the general government budget, in 1968 SS and all other government trust funds were added in to the national budget.

    "The investment rules governing payroll tax income were also established in 1935, and are essentially the same ones in use today. Specifically, the 1935 Act stated: "It shall be the duty of the Secretary of the Treasury to invest such portion of the amounts credited to the Account as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States." (See Title II, Section 201of the 1935 law)

    Since the assets in the Social Security trust funds consists of Treasury securities, this means that the taxes collected under the Social Security payroll tax are in effect being lent to the federal government to be expended for whatever present purposes the government requires. In this indirect sense, one could say that the Social Security trust funds are being spent for non-Social Security purposes. However, all this really means is that the trust funds hold their assets in the form of Treasury securities.

    These financing procedures have not changed in any fundamental way since payroll taxes were first collected in 1937. What has changed, however, is the accounting procedures used in federal budgeting when it comes to the Social Security Trust Funds.

    In early 1968 President Lyndon Johnson made a change in the budget presentation by including Social Security and all other trust funds in a"unified budget." This is likewise sometimes described by saying that Social Security was placed "on-budget."

    In the 1983 Social Security Amendments a provision was included mandating that Social Security be taken "off-budget" starting in FY 1993."

    1968 was when the on-budget/off-budget dance with SS funds started. But LBJ didn't change the way SS funds were used, he just changed the way they were reported in the budget. See it here:

    http://www.ssa.gov/history/Bu...
    (more)
  • DC 2011/07/16 11:13:34 (edited)
  • Wolf 2011/07/16 09:46:07
    Wolf
    +1
    Never existed the government spend the excess for instead of having invested it at a secure risk-free rate because the payments easily would support the $12K to $26K payouts for 25 years...note that the multi-millionaire fraudulent public sector pensions are never mentioned or the high raises the public sector gives themselves each year even in the recession...we have a massively bloated public sector now costing $7 Trillion annually at the federal, state and local levels...there is an easy $400 Billion annual savings in restructuring the federal operations including headcount...what we see here is that there is no reason for a deficit moving forward in 2012...2012 Budget $2.2 Trillion maximum...but these thieves are just filling their pockets and those of their friends...no cutting has taken place in this operation ...
  • ed 2011/07/16 08:40:05
    ed
    +1
    it got spent that's what happened to it.
  • Dave 2011/07/16 08:14:58
    Dave
    Never was a "trust fund". get a clue.
    The social security program was designed to be a loan program where the money is constantly moving throughout the government by a series of loans that the government pays back with interest to cause the funds to grow. a loan program where the government loans itself money and pays itself back with interest. Kind of like when you borrow from a share draft account at a credit union and pay yourself back your own money. except the credit union in this case keeps the interest charged.
  • Dave Dave 2011/07/16 08:16:05
    Dave
    and BTW lowering taxes, policing the world, and supportin g nations like Pakistan, Israel,a nd Egypt cause social security fund to dwindle as the excess revenue over the budget is suppose to be placed in social security funds.
  • ~HopelessRomanticM17~ 2011/07/16 06:00:51
    ~HopelessRomanticM17~
    It spontaneously evaperated....
  • ☆The Rock☆ * AFCL* The Sheriff!!
    +3
    There is no security or is there any trust so how can it be a Social Security Trust Fund..The thieves need to be all jailed and impeached!!
  • Gary 2011/07/16 05:39:23
    Gary
    I don't think it ever existed beyond a line item entry in the government's accounting ledgers. Regardless of whether there was ever an actual trust fund or not, the simple fact is that social security is a ponzi scheme plain and simple and has been since it was created back in the days of FDR. Every President and every Congress since then has known it was a ponzi scheme and therefore destined to ultimately fail from the moment of its creation.

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